Tough year for Zim economy: IMF

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IOL pic dec12 zimbabwe robert mugabe file Reuters Zimbabwean President Robert Mugabe. File picture: Philimon Bulawayo

Hahare - Zimbabwe's struggling economy will continue to face challenges this year, with minimal growth expected, the International Monetary Fund said on Thursday.

“The macroeconomic environment is expected to remain challenging in 2014, and the outlook is for continued moderate growth,” the IMF said in a statement at the end of a mission to the southern African country.

In December, the country's Finance Minister Patrick Chinamasa forecasted 6.1 percent growth, boosted by the recovery of the agricultural sector, mining and construction.

But the IMF said the country's potential to achieve fuller growth depended on increased investment spending by the government, improving the investment climate and transparency in the mining sector.

Some of the challenges facing Zimbabwe include a bloated public sector wage bill and a $10 billion external debt.

However, Chinamasa has ruled out layoffs as a measure to reduce the bloated wage bill, which eats up 70 percent of public funds.

The IMF also advised that “it will also be necessary to engage with the country's creditors to work towards a solution to the long-standing debt arrears problem” faced by the country.

It said Zimbabwe's challenges could be compounded by the possibility of further weakening of export prices, a tightening of external financing conditions and delays in implementing policies.

Zimbabwe's economy is recovering from years of collapse, prompted by a political crisis that hit the currency and caused hyperinflation.

The IMF pledged to continue supporting the country's efforts to implement stronger macroeconomic policies through targeted technical assistance and capacity-building activities.

The institution is this year expected to reopen its offices in Harare.

Sapa-AFP


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